Fourth Quarter State Existing-Home Sales Third-Highest on Record
February 15, 2006
WASHINGTON – Total existing-home sales, including single-family and condo, were at the third-highest pace on record in the fourth quarter of 2005. In addition, 24 states showed increases in sales activity over the same period in 2004, according to the National Association of Realtors®.
The latest report on total existing-home sales shows that nationwide the seasonally adjusted annual rate* was 6.90 million units in the fourth quarter, up 0.3 percent from the 6.88 million-unit level in the fourth quarter of 2004 but 4.7 percent below the record pace of 7.24 million units in the third quarter of last year. The second highest sales rate was 7.22 million in the second quarter of 2005.
The strongest performance was in Arkansas, where the fourth-quarter resale pace jumped 29.8 percent compared with the fourth quarter of 2004. Alaska existing-home sales rose 28.4 percent from a year earlier, while Louisiana posted the third highest increase, up 28.1 percent. Six other states also recorded double-digit sales gains from a year ago. Twenty-three states and the District of Columbia posted declines, although 39 states set records for all of 2005. Complete data was not available for three states.
David Lereah, NAR’s chief economist, said rising interest rates dampened the sales pace in the closing quarter of last year. “Mortgage interest rates were at the highest level since the third quarter of 2003,” he said. “At the same time, we’ve seen strong double-digit appreciation in home prices, so a modest slowing from record sales was to be expected. The good news is that home sales are being sustained at historically high levels.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.22 percent in the fourth quarter, up from 5.76 percent in the third quarter; it was 5.73 percent in the fourth quarter of 2004 and 6.29 percent in the third quarter of 2003.
NAR President Thomas M. Stevens from Vienna, Va., said the normalization currently under way is good for the market. “Both home buyers and home sellers are benefiting from the growing balance between them,” said Stevens, senior vice president of NRT Inc. “With improving inventories taking pressure off of the transaction process, home sellers – who usually are also in the process of buying – are finding a favorable negotiation environment, along with the buyers of their own homes. This means that consumers in most of the country can take the time for all the steps that real estate professionals recommend, including the use of appropriate contingencies to protect themselves.”
Regionally, the strongest performance was in the South, which reported an increase of 4.5 percent to a resale pace of 2.71 million units in the fourth quarter in comparison with the same quarter in 2004. After Arkansas and Louisiana, the strongest increase in the South was in Mississippi, up 17.6 percent from a year earlier; existing-home sales in Oklahoma jumped 15.6 percent, while three other Southern states also posted double-digit sales increases in the same time frame.
“Clearly, the region of the Gulf Coast saw a boost in home sales resulting from the needs of displaced residents in the wake of Hurricane Katrina,” Lereah said.
In the Midwest, total existing-home sales slipped 0.4 percent to a 1.55 million-unit annual sales rate from the same period in 2004. Kansas led the region, up 6.8 percent from the fourth quarter a year earlier. Iowa ranked second, posting a 3.3 percent increase, followed by Ohio, with a gain of 1.9 percent.
In the West, the fourth quarter existing-home sales level of 1.54 million units was 3.8 percent below the fourth quarter of 2004. After Alaska, the next highest increase in the region was in Utah, where total existing-home sales rose 18.8 percent compared with a year earlier; Montana sales activity rose 9.8 percent while New Mexico increased 9.7 percent.
The Northeast recorded an existing-home sales pace of 1.10 million units in the fourth quarter, down 2.7 percent from a year earlier. Sales activity in New York state was 1.7 percent below a year ago, Rhode Island was down 2.6 percent and Pennsylvania existing-home sales were off by 2.9 percent, but all three set annual records in 2005.
Source: The National Association of Realtors
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